Hazardous occupation considerations for life insurance

10 August 2018

Learn more about finding life and income protection insurance for hazardous occupations.

All jobs have different risks and accidents can occur in any workplace. Although employees are protected by workers compensation coverage you can still get additional cover for more injury, illness or death that may occur either at or outside of the workplace.

Life insurance pays benefits to your family in the event of your death. It is often bundled with income protection insurance which pays out benefits if you are temporarily unable to work. Riskier occupations make having this kind of comprehensive insurance more important, but this can also make it more expensive.

Insurers will consider your personal risk level for the actual job you work rather than your industry as a whole. The most dangerous specific professions include, but are not limited to, commercial fishers, loggers, underground miners, roofers, electrical power line technicians, fire-fighters, police, security and patrol officers, oil and gas drillers, taxi and truck drivers, construction equipment operators, animal slaughterers and metalworkers.

Insurers determine an occupation’s risk level based on relative fatality and injury rates, or the number of workers injured or killed compared to the total number of people in that profession...

How job risk levels are determined

Insurers determine how risky a job is by putting it into an occupation category based on what you actually do from day to day, and not what your job title is. For example, the managing director of a construction firm who spends his day working on job sites would be categorised as a blue collar construction worker, not a white collar managing director.

Different insurance providers categorise jobs differently, but they are generally broken down into groups like those below. The more manual labour or hazards present in your job, the higher your premiums.

White collar. This is for jobs with very light or nonexistent manual duties. Occupations in this group have no exposure to unusual hazards and an emphasis on mental rather than physical work. This includes bank tellers, most office workers and salespeople who don’t make any deliveries or do any heavy lifting.

Light blue collar. This is for jobs that involve a relatively small amount of light manual labour or direct supervision of manual workers, such as construction foremen who spends most of their time in a site office.

Skilled blue collar. This category generally encompasses licensed tradesmen who do specialised and skilled manual work, such as plumbers, bakers and many maintenance workers.

Heavy blue collar. This category is for jobs that involve a lot of manual work, but not in particularly hazardous areas, such as many manufacturing and construction jobs.

Special risk.This is for occupations that present special hazards which prevent insurers from comfortably grouping into one of the other groups. It often includes jobs in the aviation industry, heavy equipment operators, demolition workers, underground or high altitude workers and many more.

Uninsurable. If your job involves particularly hazardous day to day activities or environments, then the insurer might classify it as uninsurable which means they will refuse to sell you an insurance policy. Different insurers have different uninsurable occupations, so you can still find cover elsewhere if declined. Uninsurable jobs may include long distance truckers, professional divers, explosives specialists, deep sea fishermen and others.

Some key factors to consider in regards to how your occupation will be classed by the insurer include:

Different insurers might put the same job in a different category. You may be able to get a better deal by finding an insurer who puts your job into a lower risk category.

If you work more than one job, your occupational risk is determined by the job carrying the highest risk.

Just because one insurer classifies your job as uninsurable doesn’t mean they all do.

Your risk profile is determined by what you actually do from day to day, not your job title or industry. An administrator in the mining industry will probably be classified as white collar, while an office security guard might be blue collar or special risk.

Risk levels are based on the actual rate of occupational injury and death, not simply the presence of potential dangers. For example air traffic controllers are nominally a white collar occupation, but the extreme stress levels make it functionally more dangerous than manual labour, based on the actual levels of injury and death among air traffic controllers compared to construction workers.

How a dangerous occupation affects your premiums

One of the main factors that affects premiums is your sum insured, which is the total amount of benefits that will be paid out in the event of your death or disablement. It is a good idea to calculate your required sum insured before comparing policies. The more benefits paid, the higher your premiums. This combines with additional premiums for riskier jobs. Insurers charge an additional loading depending on your job, with methods varying between insurers.

Some companies may charge a flat extra, such as an additional $2 per month for every $1,000 insured for blue collar jobs, and an extra $4 for $1,000 sum insured for special risk jobs.

Others might have set prices for different sums insured, which are then modified by a certain amount, such as 20%, based on all your risk factors including occupation.

Many insurers will impose less extensive loadings for hazardous occupations, but will limit the benefits payable and set other conditions to compensate for the added risk.

The cost of your life insurance policy will depend more on your sum insured and comprehensiveness of the policy than how dangerous your occupation is, but the cost of a risky job can still be significant.

Getting insured with a high-risk occupation

There are a lot of different types of life and disability insurance policies available, it's important to shop around for coverage that compliments your needs and suits your long term financial goals.

Insurers will accommodate different occupations in one of four ways:

They will cover it as normal without extra loadings or conditions. This is generally the case with white collar occupations.

They will cover it at the cost of additional loadings and higher premiums. This is typically the way blue collar jobs are covered.

They will exclude certain situations or impose significantly higher costs to compensate for high risk levels. This is usually the case for special risk jobs.

They will decline to insure you, as happens with jobs an insurer categorises as uninsurable.

Finding the right policy can be an extra challenge with risky occupations because of how differently insurers will accommodate them. For this reason, a lot of people choose to get help from an insurance broker or financial adviser with experience in the area and the ability to compare policies and answer any questions you may have.

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Richard is the Insurance Editor at finder, and has been wrangling insurance Product Disclosure Statements for the last 4 years. When he’s not helping Aussies make sense of the fine print, he can be found testing the quality of Aperol Spritzes in his new found home of New York. Richard studied Journalism at Macquarie University and The Missouri School of Journalism, and has a Tier 1 certification in General Advice for Life Insurance. He has also been published in CSO Australia and Dynamic Business.

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